HBOS

[Dod101]

I am sure to no one's surprise, the FCA and the PRA have, after a six year investigation, decided to take no action against either of the CEOs at the time, James Crosby, or Andy Hornby. It really is appalling, although of course maybe we should blame the regulators at the time for not hauling them in. It is old hat now and we have gone over all this in the past but our regulators are completely toothless, or, when not, they over react such as at the beginning of the Covid outbreak.

Dod

[dealtn]

I am sure to no one's surprise, the FCA and the PRA have, after a six year investigation, decided to take no action against either of the CEOs at the time, James Crosby, or Andy Hornby. It really is appalling, although of course maybe we should blame the regulators at the time for not hauling them in. It is old hat now and we have gone over all this in the past but our regulators are completely toothless, or, when not, they over react such as at the beginning of the Covid outbreak.

Dod

Very little has been released factually regarding this enquiry so little can be concluded, and certainly not labelled as "appalling". From what I know over 2 million documents were looked at during the enquiry. Given that number you would expect that if widespread excessive risk taking was as prevalent and obvious as many appear to claim then it would have shown up.

The real shame to me is the blame disproportionately attributed to the very few individuals that have been found "guilty" at HBOS since the financial crisis, who in reality were little different to others in similar positions and formed part of a collective.

[Dod101]

I am sure to no one's surprise, the FCA and the PRA have, after a six year investigation, decided to take no action against either of the CEOs at the time, James Crosby, or Andy Hornby. It really is appalling, although of course maybe we should blame the regulators at the time for not hauling them in. It is old hat now and we have gone over all this in the past but our regulators are completely toothless, or, when not, they over react such as at the beginning of the Covid outbreak.

Dod

Very little has been released factually regarding this enquiry so little can be concluded, and certainly not labelled as "appalling". From what I know over 2 million documents were looked at during the enquiry. Given that number you would expect that if widespread excessive risk taking was as prevalent and obvious as many appear to claim then it would have shown up.

The real shame to me is the blame disproportionately attributed to the very few individuals that have been found "guilty" at HBOS since the financial crisis, who in reality were little different to others in similar positions and formed part of a collective.

There was but one fall guy I think, Peter Cummings. The fact that other banks did not get themselves into such a mess is surely a sign of incompetence at least, on a grand scale and continuing for quite some time. The fact that the FCA and the PRA have taken no action would suggest to me that they fell down on their job so maybe they decided that it was best to let sleeping dogs lie. Crosby at least acknowledged that he fell short, let us say, because he asked that his knighthood be removed.

Dod

[dealtn]

The fact that other banks did not get themselves into such a mess is surely a sign of incompetence at least, on a grand scale and continuing for quite some time.

Well that's an interesting piece of revisionism!

[BullDog]

The fact that other banks did not get themselves into such a mess is surely a sign of incompetence at least, on a grand scale and continuing for quite some time.

Well that's an interesting piece of revisionism!

IIRC, even today, the tax payer still owns around 48% of NatWest (formerly BoS).

[Dod101]

The fact that other banks did not get themselves into such a mess is surely a sign of incompetence at least, on a grand scale and continuing for quite some time.

Well that's an interesting piece of revisionism!

IIRC, even today, the tax payer still owns around 48% of NatWest (formerly BoS).

No. NatWest of today is actually a reincarnation of RBS not BoS which combined with Halifax to from the BOS in HBOS.

For dealtn What I meant was that HBOS got itself into a huge mess because of the reckless lending by Crosby and then Hornby, not the various sub prime problems that the other banks suffered.

Dod

[dealtn]

The fact that other banks did not get themselves into such a mess is surely a sign of incompetence at least, on a grand scale and continuing for quite some time.

Well that's an interesting piece of revisionism!

IIRC, even today, the tax payer still owns around 48% of NatWest (formerly BoS).

No. NatWest of today is actually a reincarnation of RBS not BoS which combined with Halifax to from the BOS in HBOS.

For dealtn What I meant was that HBOS got itself into a huge mess because of the reckless lending by Crosby and then Hornby, not the various sub prime problems that the other banks suffered.

Dod

I'm afraid not. Crosby and Hornby hardly did any non-mortgage lending, and knew very little about banking generally, and certainly not commercial lending. They were much in favour of rolling our retail banking, and associated saving and mortgage business - and the loan books there were profitable and even during the recession that followed took very little write downs. Property assets backing this were generally healthy and prices rose then, and since. You are correct most mortage lending was sensible in terms of income cover, % of property, and by type of borrower. An element of self certification and non-standard lending occurred, but usually through specialist (and profitable) lenders such as Birmingham Midshires and NWS. Sub prime wasn't an issue - except as perceived in the credit trading division of its Treasury. In fact the vast majority of this was in liquidity portfolios - and the Bank made large errors here in being unable to persuade the City (and politicians) what this was and why it was much closer to AAA than the "crap" normally associated with sub-prime.

Crosby and Hornby demanded of the Commercial lending areas, such as Peter Cummings, that Balance Sheet growth (a key measure of success before the financial crisis) that accompanied the retail side of the bank. That team was one of the best lenders against commercial and property assets as demonstrated by the Bank of Scotland experience of expansion into England, and the good reputation it got in the downturns of the 80s and 90s.

I would say they didn't really understand banking, or crisis management any where near as much as executives at other banks. (Lloyds as "saviours" weren't any better as it turned out).

[Dod101]

The fact that other banks did not get themselves into such a mess is surely a sign of incompetence at least, on a grand scale and continuing for quite some time.

Well that's an interesting piece of revisionism!

IIRC, even today, the tax payer still owns around 48% of NatWest (formerly BoS).

No. NatWest of today is actually a reincarnation of RBS not BoS which combined with Halifax to from the BOS in HBOS.

For dealtn What I meant was that HBOS got itself into a huge mess because of the reckless lending by Crosby and then Hornby, not the various sub prime problems that the other banks suffered.

Dod

I'm afraid not. Crosby and Hornby hardly did any non-mortgage lending, and knew very little about banking generally, and certainly not commercial lending. They were much in favour of rolling our retail banking, and associated saving and mortgage business - and the loan books there were profitable and even during the recession that followed took very little write downs. Property assets backing this were generally healthy and prices rose then, and since. You are correct most mortage lending was sensible in terms of income cover, % of property, and by type of borrower. An element of self certification and non-standard lending occurred, but usually through specialist (and profitable) lenders such as Birmingham Midshires and NWS. Sub prime wasn't an issue - except as perceived in the credit trading division of its Treasury. In fact the vast majority of this was in liquidity portfolios - and the Bank made large errors here in being unable to persuade the City (and politicians) what this was and why it was much closer to AAA than the "crap" normally associated with sub-prime.

Crosby and Hornby demanded of the Commercial lending areas, such as Peter Cummings, that Balance Sheet growth (a key measure of success before the financial crisis) that accompanied the retail side of the bank. That team was one of the best lenders against commercial and property assets as demonstrated by the Bank of Scotland experience of expansion into England, and the good reputation it got in the downturns of the 80s and 90s.

I would say they didn't really understand banking, or crisis management any where near as much as executives at other banks. (Lloyds as "saviours" weren't any better as it turned out).

So, what are you saying, that Crosby and Hornby were models of rectitude? The fact that HBOS had to be massively bailed out and the unfortunate Lloyds was almost wrecked in the process was just an accident of history? That Halifax managed to wreck what was probably one of the best run banks in the UK, Bank of Scotland but well these tings happen?

Come on, would you have trusted either of these people to run a whelk stall? Well they might just about manage that.

Dod

[dealtn]

So, what are you saying, that Crosby and Hornby were models of rectitude? The fact that HBOS had to be massively bailed out and the unfortunate Lloyds was almost wrecked in the process was just an accident of history? That Halifax managed to wreck what was probably one of the best run banks in the UK, Bank of Scotland but well these tings happen?

Come on, would you have trusted either of these people to run a whelk stall? Well they might just about manage that.

Dod

No I am not saying that and have no idea how you have interpreted that as either my opinion or the historical facts. Have you actually read what I have written?

I have worked in all 3 institutions. Literally been there and seen it. I have met all the individuals named in this thread on multiple occasions too. Across all 3 institutions I have known individuals at both extremes of the spectrum of competence towards the top and bottom from boardroom to coalface.

[Dod101]

So, what are you saying, that Crosby and Hornby were models of rectitude? The fact that HBOS had to be massively bailed out and the unfortunate Lloyds was almost wrecked in the process was just an accident of history? That Halifax managed to wreck what was probably one of the best run banks in the UK, Bank of Scotland but well these tings happen?

Come on, would you have trusted either of these people to run a whelk stall? Well they might just about manage that.

Dod

No I am not saying that and have no idea how you have interpreted that as either my opinion or the historical facts. Have you actually read what I have written?

I have worked in all 3 institutions. Literally been there and seen it. I have met all the individuals named in this thread on multiple occasions too. Across all 3 institutions I have known individuals at both extremes of the spectrum of competence towards the top and bottom from boardroom to coalface.

In which case you know more than me but at the same time, your closeness to what happened is probably affecting your judgement.

Dod

[Nimrod103]

So, what are you saying, that Crosby and Hornby were models of rectitude? The fact that HBOS had to be massively bailed out and the unfortunate Lloyds was almost wrecked in the process was just an accident of history? That Halifax managed to wreck what was probably one of the best run banks in the UK, Bank of Scotland but well these tings happen?

Come on, would you have trusted either of these people to run a whelk stall? Well they might just about manage that.

Dod

No I am not saying that and have no idea how you have interpreted that as either my opinion or the historical facts. Have you actually read what I have written?

I have worked in all 3 institutions. Literally been there and seen it. I have met all the individuals named in this thread on multiple occasions too. Across all 3 institutions I have known individuals at both extremes of the spectrum of competence towards the top and bottom from boardroom to coalface.

If everyone did their job properly, as you claim, why did it go bust? It must have been because they took excessive risks, and it all turned sour. Other institutions did the same or similar, but it still is the responsibility of management not to take excessive risks. At least not when the downside is potentially so large.

[dealtn]

So, what are you saying, that Crosby and Hornby were models of rectitude? The fact that HBOS had to be massively bailed out and the unfortunate Lloyds was almost wrecked in the process was just an accident of history? That Halifax managed to wreck what was probably one of the best run banks in the UK, Bank of Scotland but well these tings happen?

Come on, would you have trusted either of these people to run a whelk stall? Well they might just about manage that.

Dod

No I am not saying that and have no idea how you have interpreted that as either my opinion or the historical facts. Have you actually read what I have written?

I have worked in all 3 institutions. Literally been there and seen it. I have met all the individuals named in this thread on multiple occasions too. Across all 3 institutions I have known individuals at both extremes of the spectrum of competence towards the top and bottom from boardroom to coalface.

If everyone did their job properly, as you claim, why did it go bust? It must have been because they took excessive risks, and it all turned sour. Other institutions did the same or similar, but it still is the responsibility of management not to take excessive risks. At least not when the downside is potentially so large.

So you think I am making the claim that everyone did their job properly when I have clearly said large errors were made?

It absolutely is the responsibility of the Bank's Board to both understand, and manage risks. Here, as at other institutions, that didn't take place. I would place much of the blame in this particular instance at the CEO, but also the shareholders for not employing a banker in that key role.

I suggest you read what I have written rather than make assumptions. I know a lot more about this, and indeed why this institution was rescued (not went bust as you claim) when others didn't. The OP made the initial claim it was appalling no action was taken by the FCA and PRA - without backing up such a claim with evidence. Furthermore going on to claim other banks didn't get into such a mess, when clearly others did. Then accused Crosby and Hornby of reckless lending when they did no such thing.

If a sensible discussion is to take place lets do so around the actual facts.

[dealtn]

So, what are you saying, that Crosby and Hornby were models of rectitude? The fact that HBOS had to be massively bailed out and the unfortunate Lloyds was almost wrecked in the process was just an accident of history? That Halifax managed to wreck what was probably one of the best run banks in the UK, Bank of Scotland but well these tings happen?

Come on, would you have trusted either of these people to run a whelk stall? Well they might just about manage that.

Dod

No I am not saying that and have no idea how you have interpreted that as either my opinion or the historical facts. Have you actually read what I have written?

I have worked in all 3 institutions. Literally been there and seen it. I have met all the individuals named in this thread on multiple occasions too. Across all 3 institutions I have known individuals at both extremes of the spectrum of competence towards the top and bottom from boardroom to coalface.

In which case you know more than me but at the same time, your closeness to what happened is probably affecting your judgement.

Dod

I would suggest I have a lot of clarity here, and am, and have been, critical of many employed at the time. The difference being I can back that up with actual knowledge and base my criticism on what those individuals and institutions actually did (or didn't do). I don't think my judgement is wrong here but I can certainly spot untruths and assumptions in this area. I(f you think I am non critical and 100% behind the people and institutions then you are wrong, and certainly not reading what I have written on a number of occasions on this subject.

[Nimrod103]

So, what are you saying, that Crosby and Hornby were models of rectitude? The fact that HBOS had to be massively bailed out and the unfortunate Lloyds was almost wrecked in the process was just an accident of history? That Halifax managed to wreck what was probably one of the best run banks in the UK, Bank of Scotland but well these tings happen?

Come on, would you have trusted either of these people to run a whelk stall? Well they might just about manage that.

Dod

No I am not saying that and have no idea how you have interpreted that as either my opinion or the historical facts. Have you actually read what I have written?

I have worked in all 3 institutions. Literally been there and seen it. I have met all the individuals named in this thread on multiple occasions too. Across all 3 institutions I have known individuals at both extremes of the spectrum of competence towards the top and bottom from boardroom to coalface.

If everyone did their job properly, as you claim, why did it go bust? It must have been because they took excessive risks, and it all turned sour. Other institutions did the same or similar, but it still is the responsibility of management not to take excessive risks. At least not when the downside is potentially so large.

So you think I am making the claim that everyone did their job properly when I have clearly said large errors were made?

It absolutely is the responsibility of the Bank's Board to both understand, and manage risks. Here, as at other institutions, that didn't take place. I would place much of the blame in this particular instance at the CEO, but also the shareholders for not employing a banker in that key role.

I suggest you read what I have written rather than make assumptions. I know a lot more about this, and indeed why this institution was rescued (not went bust as you claim) when others didn't. The OP made the initial claim it was appalling no action was taken by the FCA and PRA - without backing up such a claim with evidence. Furthermore going on to claim other banks didn't get into such a mess, when clearly others did. Then accused Crosby and Hornby of reckless lending when they did no such thing.

If a sensible discussion is to take place lets do so around the actual facts.

I take your point that HBOS did not go bust, but only because it was taken over by Lloyds in a deal which sank that bank itself. I have often wondered about how Lloyds came to take over HBOS when, I distinctly remember thinking at the time, it was a dangerous time to go in for risky expansion. My impression was that Lloyds was 'strongarmed' into making a takeover bid by Gordon Brown, but of course what do I know. I only know that the truth will almost certainly never come out.
Other banks collapsed. I lost money on B&B, A&L and Lloyds. Strange though that so many converted building societies collapsed when their lending presumably was entirely to domestic housing, where values were largely unaffected by the financial collapse going on all around. Presumably somebody made a killing by taking over the wreckage of those banks.

[dealtn]

I take your point that HBOS did not go bust, but only because it was taken over by Lloyds in a deal which sank that bank itself.

We will never know what would have happened to Lloyds without the deal. In fact I would argue a considerable reason why Lloyds nearly sank was how it managed what it had taken on. Naivety and ignorance spring to mind and plenty of self-inflicted wounds.

I have often wondered about how Lloyds came to take over HBOS when, I distinctly remember thinking at the time, it was a dangerous time to go in for risky expansion. My impression was that Lloyds was 'strongarmed' into making a takeover bid by Gordon Brown, but of course what do I know. I only know that the truth will almost certainly never come out.

Those 30 year papers released in 2037 will make interesting reading for sure, although I agree to an extent not everything will become public knowledge even then.

Other banks collapsed. I lost money on B&B, A&L and Lloyds.

Yes, HBOS was far from alone in terms of outcomes.

Strange though that so many converted building societies collapsed when their lending presumably was entirely to domestic housing, where values were largely unaffected by the financial collapse going on all around. Presumably somebody made a killing by taking over the wreckage of those banks.

Yes, and again naivety, in many corners. As was argued at the time by many this was a liquidity crisis not a solvency one. The ultimate owners of those books were happy with the assets, and in hindsight would have been if bought at full price. The desire to sell pound coins for 50p doesn't look good in hindsight. Many made killings (even those that were deemed to be at "blame" within banks - but that's a story for another day maybe).